The Dothan, Ala.-based No. 2 video rental service said ongoing fiscal restructuring following its October Chapter 11 bankruptcy filing necessitated the move.

“Movie Gallery today confirmed that its MovieBeam service will be discontinued effective Dec. 15,” said a company spokesperson. “The decision to discontinue the service was made in light of the company's ongoing efforts to enhance its financial performance.”

Originally founded by The Walt Disney Co. and co-funded by Cisco Systems and Intel Corp. for about $150 million, MovieBeam used over-the air data casting to automatically load proprietary $200 set-top boxes, which allowed users to watch movies on demand with no downloading or hard disc storage required.

The service was available in 31 major cities nationally and featured a regenerating stock of 100 movies (10 new titles per week) loaded for on-demand viewing at any given time. Rentals (for 24 hours) ranged in price from $1.99 to $4.99.

Gallery envisioned MovieBeam as catalyst to jumpstart a non-existent digital distribution channel that would be marketed at the retail level and include online rentals.

Analyst Michael Pachter said the decision to acquire MovieBeam was an honest attempt to play catch-up to Blockbuster Inc.'s Total Access and Netflix Inc.'s PC streaming service.

“They just didn't realize they were going bankrupt at the time,” Pachter said.